WASHNGTON – Cody Allen Easterday, 49, of Mesa, Wash., pleaded guilty to defrauding Tyson Foods Inc. and another company out of more than $244 million by charging the companies under various agreements for the costs of buying and feeding hundreds of thousands of cattle that did not exist, the US Department of Justice (DOJ) said.
Easterday pleaded guilty to one count of wire fraud and agreed to repay $244,031,132 in restitution. He is scheduled to be sentenced on Aug. 4 and faces a maximum penalty of 20 years in prison.
Federal prosecutors said Easterday ran the scheme since at least 2016 and continuing through November 2020. Tyson Foods discovered the fraud during a company-led investigation. Tyson found that Easterday falsified documents to obtain reimbursement by Tyson Foods of more than $200 million in connection with some 200,000 cattle that did not exist.
In an SEC filing in December 2020, Tyson Fresh Meats announced that it was undergoing an internal review of its beef segment which reported a $285 million loss last year.
“Based on the preliminary findings from the internal review, the Company’s management believes that the resulting loss to the Company is isolated to the Beef segment and is attributable to this one cattle supplier,” the filing said. “This cattle supplier represents approximately 2% of the total cattle supplied to our Beef segment each year for fiscal 2017 through 2020.”
Tyson Fresh Meats, the beef and pork processing subsidiary of Tyson Foods, sued Easterday Ranches in January, seeking more than $200 million in reimbursement. Company spokesman Gary Mickelson said at the time that Easterday “...admitted to the scheme and acknowledged the fraud was initiated to cover extensive commodities trading losses he had experienced.”
The company had no comment on Easterday’s guilty plea.
The DOJ said Easterday used the fraud proceeds for his personal use and benefit, and for the benefit of his company, Easterday Ranches, including to cover approximately $200 million in commodity futures contracts trading losses that he had incurred on behalf of his company.
In connection with his commodity futures trading, Easterday also defrauded the CME Group Inc. (CME) when, on two separate occasions, Easterday submitted falsified paperwork to the CME that resulted in the CME exempting Easterday Ranches from otherwise-applicable position limits in live cattle futures contracts, the DOJ added.
“For years, Cody Easterday perpetrated a fraud scheme on a massive scale, increasing the cost of producing food for American families,” said Acting Assistant Attorney General Nicholas L. McQuaid of the DOJ’s Criminal Division. “The Criminal Division’s prosecutors are committed to swiftly and thoroughly prosecuting frauds affecting our nation’s agricultural and other commodities markets, whether in the heartland or on Wall Street.”